Bankruptcy Forms Substantially Change Effective December 1, 2015.

An Illinois judge on Friday ruled [opinion, PDF] a law intended to fix the pension crisis in the state violates the Illinois constitution. Sangamon Country Circuit [official website] Judge John Belz ruled in favor of state employees and retirees who sued to block the law. Last December, state lawmakers passed [JURIST report] the bill [text, PDF], which amended the state’s pension plan in an effort to cut spending and lower the state’s debt. The law would raise the retirement age and lower annual increases in pensions to retired employees, which would be based on the number of years worked. Public employee unions challenged the measure under the Pension Protection Clause of the Illinois Constitution [materials], arguing that the constitution prohibits reducing benefits or compensation. In response, the state argued that pensions can be modified in times of fiscal emergency. ‘The state of Illinois made a constitutionally protected promise to its employees concerning their pension benefits,’ wrote Judge Belz. ‘Under established and uncontroverted Illinois law, the state of Illinois cannot break this promise. Illinois Attorney General Lisa Madigan [official website] announced [statement] that they “plan to immediately appeal the decision to the Illinois Supreme Court.’

Pension rights have been a controversial issue recently. In December, a judge for the US Bankruptcy Court for the Eastern District of Michigan [official website] ruled [JURIST report] that the city of Detroit is eligible for bankruptcy [JURIST op-ed]. The insolvent city’s debt [JURIST op-ed] includes 3.5 billion dollars in pension funds. The bankruptcy was allowed to go forward despite a Michigan state court ruling [JURIST report] last year which held that the city’s filing for bankruptcy violated the Michigan Constitution. The bankruptcy court held that the pension funds could not be treated any differently than other unsecured debt. In March 2013 the US District Court for the Southern District of New York [official website] denied [JURIST report] a motion to dismiss a lawsuit brought by a pension plan holder against JPMorgan (JPM) [corporate website; JURIST news archive]. The court found that sufficient allegations were raised to support a claim for breaches of both the duty of care and the duty of loyalty.

Who Comes to the First Meeting of Creditors?

09 Saturday Nov 2013

Posted by Celia C. Elwell, RP in Bankruptcy Law, Consumer Law, Debt Collection

≈ Comments Off on Who Comes to the First Meeting of Creditors?

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341 Meeting, Bankruptcy, Creditor, First Meeting of Creditors

If you are not familiar with bankruptcy law, and find yourself facing the First Meeting of Creditors, this is an excellent overview of what to expect. CCE

Consumer Law Updates

Section 341 of the United States Bankruptcy Code requires that the United States Trustee shall hold a meeting of the creditors within a reasonable time (usually within 20 and 40 days) after a Bankruptcy Petition is filed. It doesn’t restrict that to cases with assets or ongoing business activities or anything else. It requires a meeting of creditors (generally referred to as the first meeting, because there can be more in complicated cases) in all cases filed.

It is called the First Meeting of Creditors (or 341 hearing), which confuses many of my clients who then seem to think that their creditors will actually show up. In most consumer cases it is really a meeting between the Trustee assigned to the case, the debtor and debtor’s counsel. I doubt anyone actually knows why the same provision for the same meeting is included in the Code for all chapters. In reality…

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